A CIO’s key to success in digital times is the creation of a digital platform and building new relationship strengths within the company.
Not long ago, CIOs were organizationally supervised by the CFO. IT was a means to an end in order to secure the operational backbone of a company, and IT spend was not well seen. The present topics around the CIO manifest itself in terms like “bi-modal IT” or “two-speed IT.” Simply put: IT spending is split into two buckets, the “keeping the lights on bucket” and the “let’s be innovative bucket.”
Contrary to the past, where 80 percent of IT spend was used to keep the machines running, today the table has flipped to using only 20 percent to keep the lights on. This means that the rest of the budget is freed up for innovation purposes. So 65 percent of CIOs are measuring the success of their organization against different KPIs than before.*
Strategic Bet for CIOs: Building a Digital Platform
Based on more than 150 CxO engagements per year, the SAP Center for Digital Leadership has derived digital patterns that indicate a clear trend that will reshape the role of the CIO in a great fashion: building a digital platform and defining a digital ecosystem.
Depending on the specific industry a company belongs to, this strategic task has already gained significant traction. Two examples for this are the insurance and health industries, which are changing their very traditional business models by opening up and incorporating various players along their value chains.
Instead of a product-centric focus, the right way forward is expanding an organization’s value chain by establishing a digital platform for suppliers, partners, and even competitors on which to collaborate. We see this digital platform defined as a cloud-based open ecosystem with open interfaces fostering more and agile innovation, which is a much-needed requirement for the servitization of products.
As the topic of the digital ecosystem is a more strategic one, it often belongs to the CEO. However, the underlying infrastructure might be the key responsibility of the future CIO.
An example of such a digital ecosystem with an underlying digital platform is the partnership between SAP and the European Space Agency (ESA). With SAP Cloud Platform, SAP provides the technological infrastructure together with patterns around digital leadership and innovation while ESA provides its vast amount of Earth Observation data. The result is an enriched open ecosystem that can be leveraged by large and small businesses, startups, and large organizations alike to create and provide real business value and solve some of the biggest challenges around climate effects, natural disasters, digital farming, or gas pipeline management.
Triangle of Success: CIO, CEO, Lines of Business Heads
When you search “Chief Information Officer” online, the amount of articles headlining that the CIO is the new leader of the digital transformation is overwhelming. SAP begs to differ. Saying that the CIO is the sole key force behind a company’s transformation into a digital business is to narrow-minded. It is much more a symbiosis between a visionary CEO, bold line-of-business managers, and a forward-thinking CIO that will enable an organization to self-transform. The CEO is the one to paint the picture of a visionary digital ecosystem that the CIO will bring to life in tandem with the respective line managers by providing a digital platform.
The Renaissance of the CIO
The role of the CIO has been changing over the last few years and decades. From the “king of the servers” to the “digital enabler,” the CIO has been in the spotlight as well as the shadows. Now, with new business models waiting to be created and entire industries ready to be overhauled, all of this will need the enabling technology as a foundation for innovation. It is once more the time for the CIO to stand on stage and reach well-deserved attention.
About the SAP Center for Digital Leadership
As a leading digital pioneer, the SAP Center for Digital Leadership helps CxO customers and their organizations to navigate their digital transformation and lead with innovation. Based on SAP’s internal digital transformation learnings, the research agenda and meetings with more than 150 CxO customers per year, the center provides leaders with best practices for leading digital transformation.
The network and partner ecosystem represents today’s and tomorrow’s leaders in digital business. Partners like European Space Agency and Wacom trust the center and jointly create digital open ecosystems.
For more information, visit www.sap.com/digitalleadership.